February 11, 2008 | WineDirect Admin
You may have heard of big wave surfing, in places like Maui, Hawaii’s Jaws or at competitions such as Mavericks on the coast of Northern California (check out the documentary Riding Giants). Last month I enjoyed a great day at the beach watching the Mavericks competition. It’s a bodaciously insane surfing event where the world’s best must be towed by jet skis to catch 30-foot waves.
What’s that got to do with wine marketing? Well, it made me think of an analogy - here goes:
The metaphoric big wave is the expected growth of online wine sales. Numbers don’t lie - so here are the recent stats for the year 2007 (courtesy of the Wine Market Council):
38% of Millenials (those born between 1980 and 1993) say they are drinking more wine. Nearly all Millennials will be of legal drinking age in the next 5 years and this group will drive both consumption gains and taste trends.
18% percent of core wine drinkers (those that imbibe at least once a week) have purchased wine online.
64% of those purchases were done on winery websites.
Over the next 5 years online wine sales will triple!!!!!!
My point today is that the big wave is coming for online wine sellers, be they wineries or retailers. How will they surf it and which channel is best prepared to capture these new consumers we keep hearing about? The telling number here is that 2/3 of online sales in 2007 were direct, i.e. from winery websites. As online sales grow, will wineries keep that market share, or will it dwindle?
I would argue that currently retailers are better poised to ride the wave. Like the surfers, if you want to ride big, you literally need some ‘pull’- pull marketing that is! Retailers have quite a bit of it already, are getting more, and it will increasingly help them.
Wineries have many advantages over the traditional retail channels like content, branding, being the producer, loyalty built through hospitality etc., not price however. These strengths work great to retain customers acquired directly (via tasting room, clubs, website…). However, harnessing the power of the web to acquire new customers is another feat entirely - hence the need for pull marketing. To keep with the analogy, wineries have superior surfing skills but they don’t have a Jet Ski to help them catch that mythical break. Bummer dude!
A newfound desire for wine, marketing, demographics, deregulation, supply… all converge to generate and sustain new demand. The new wine buyers that make up the big wave are the famed Millenials. Who are they? What is their purchasing behavior? How do they shop? What makes them tick? These are questions anybody selling wine online should be asking. Yep, the eCommerce revolution is hitting the wine world.
Like most savvy online shoppers, these new wine buyers will first look to shopping portals, vertical search engines, social shopping sites, social networks, blogs, forums, etc. to get information, prices and to make a purchase. If a prospective online wine buyer has not visited your winery or received an email from you or heard a recommendation from a friend, chances are he or she may not first look to your website to buy wine. That person will Google what they are interested in and see a very long list of possibilities - only one of them being your winery’s website.
That plethora of options can be daunting, so smart entrepreneurs have created marketing services that act as filters to help consumers find what they want quickly. You know the main ones: Wine-Searcher, WineZap, CellarTracker… and the newer ones: Snooth, Winelog, Vinquire, Radcru, TasteVine, Vino2Vino, Calwineries, Bottlenotes, Cork’d, ClassicWines… There are many. These essential outfits compete to cater to the needs of the inquisitive wine lover. With a few exceptions, they look to wine sellers to fund them. Almost all paths to purchase lead to a retailer paying for a click or a sale. These wine marketers allow supply and demand to connect, and so far, the supply being connected is represented mainly by retailers. This ecosphere of wine marketers has undeniably helped wine retailers, big or small, build their online business. Can they also help wineries?
Wine retailers have been at the online marketing game for some time now. In addition to experience, they have the advantage of working with large inventory, this makes for economies of scale in marketing. They can feed their product data to various price comparators or product list aggregators and also engage in paid search. Retailers have been quite effective at creating multiple paths to their stores. With the growing appetite for imports, this pull marketing is what will surely help them ride the big wave of online wine sales.
The number of wine producers is growing. The number of distributors is decreasing, as is their appetite for diversity… This classic scissor effect creates the need for wineries to find customers outside their usual hunting grounds. No one can argue that the web can be the largest source of new sales. We can agree that retailers already have an edge in this regard. So, given this situation, how can wineries effectively compete for new online customer acquisition?
They need to find ways to enter the same marketing channels as retailers and have their products and content listed on as many wine search engines, databases, social networks or marketing programs as possible and have links to their store wherever their brand is mentioned. Not only will having links and content listed outside your website help your SEO, it is the surest way to bring in traffic and sales.
In acquiring new customers from the web, I would argue that:
- wineries can hugely benefit from such pull marketing
- wineries actually have many strengths they can leverage over retailers
- wineries can play on mediums retailers cannot
However, for wineries to make this happen, they need what only retailers have - scale. Wine marketers need to work with compatible entities, requiring low overhead for data collection. I would argue that for wineries to build this kind of pull marketing, they need an enabler who can bring scale to the table. By working with multiple wineries, using a common data platform, such an enabler can broker on their behalf to make this happen.
In case you’re wondering where this is going… Inertia is busy building the Jet Ski that will help its clients ride the big wave. To beat the analogy to death, I’ll say that what powers the jet ski and how it pulls is best kept for a later blog post… Gnarly!